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Labor Department issues proposed regulations on overtime

By JOYCE M. ROSENBERG AP Business Writer

NEW YORK (AP) — The Labor Department has issued its long-awaited proposed regulations on overtime. The proposal would raise the pay threshold at which workers would be exempt from overtime to $35,308 from the current $23,660.

The proposed rules, which the department says would make more than 1 million workers eligible for overtime, are most likely to affect workers with jobs like shift supervisor or assistant manager at restaurants, retailers and manufacturing companies. Although they apply to workers at companies of all sizes, the rules are likely to fall most heavily on small businesses that have smaller revenue cushions than larger businesses.

The proposal revises Obama administration rules that would have doubled the pay threshold at which workers would be exempt from overtime, taking it to $47,476. The Trump administration proposal is about halfway between the current threshold, which has been in effect since 2004, and the Obama administration rules, which would have affected an estimated 4.2 million people. The Obama regulations were scheduled to take effect in 2016 but were put on hold by a federal lawsuit.

As part of federal rule-making procedures, the Labor Department proposal is posted on the federal website www.regulations.gov, where the public can post comments. It can be found in a search for the regulations’ docket number, RIN 1235-AA20.

The final regulations are likely to be similar to the proposal, but there may be changes made in response to the comments, says Marty Heller, a labor law attorney at Fisher Phillips in Atlanta.

Small-business owners have expected since Labor Secretary Alexander Acosta took office that there would be an increase in the threshold, although they “generally do not like it when the federal government intervenes on wage issues,” says Karen Kerrigan, president of the advocacy group Small Business & Entrepreneurship Council.

But the new rules include a provision meant to make business owners happy. Rather than the automatic increases for the threshold exemption that would have occurred under the Obama plan, the new rules will allow the federal-rules making process to be used every four years to approve those increases, Kerrigan said.

Business owners who don’t want to pay additional overtime have said they were exploring various options, including giving affected staff employees raises to put them into the category of exempt employees. Owners have also said they might limit workers to eight-hour shifts.

Such plans are legal, but owners should think about the impact they could have on morale, Heller says.

“The current job market is demanding that employers not just comply with law but make decisions to be competitive with one another,” he says.

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